Q1 2022 MGM Resorts International Earnings Call
[music].
Good afternoon, and welcome to the MGM Resorts International first quarter 2022 earnings conference call join.
Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer, and President Corey Sanders, Chief Operating Officer, Jonathan <unk>, Chief Financial Officer and Treasurer.
Hubert Wang President and Chief operating officer of MGM, China.
Andrew Chapman director of Investor Relations.
Participants are in a listen only mode. After the company's remarks, there will be a question and answer session.
Fairness to all participants please limit yourself to one question and one follow up.
Please note this conference is being recorded.
Now I would like to turn the call over to Andrew Chapman. Please go ahead.
Good afternoon, and welcome to the MGM resorts International first quarter 2022 earnings call.
This call is being broadcast live on the Internet at investors that MGM resorts Dot Com. We've also furnished our press release on form 8-K to the SEC.
On this call we will make forward looking statements under the safe Harbor provisions of the federal Securities laws.
Our results may differ materially from those contemplated in these statements additional information concerning factors that could cause actual results to differ from these forward looking statements is contained in today's press release, and our periodic filings with the SEC, except as required by law. We undertake no obligation to update these statements as a result of new information or otherwise during.
During this call. We will also discuss non-GAAP financial measures in talking about our performance you can find the reconciliation to GAAP financial measures in our press release and Investor presentation, which are available on our website. Finally this presentation is being recorded I will now turn it over to Bill Hornbuckle. Thank you Andrew and good afternoon, and thank you all for joining us today.
I'd like to begin today's call by once again thanking our employees at MGM resorts for the determination agility perseverance and commitment to excellence has helped fueled another strong quarter for our company we're.
We were challenged in January by the omni crime variance, but pivoted quickly into recovery mode being to multiple all time EBIT dollar records at several of our Las Vegas and digital properties in March.
These results showcase the strength of our talented team across the country. Our focus on operational efficiency and continued strong demand for their service and experience we provide at MGM resorts today I want to acknowledge and thank our employees again for all the thank you everyday to take care of our guests and each other.
As a company we remain laser focused on our strategic plan and our long term vision to be the world's Premier Gaming Entertainment company.
As a reminder of our strategic plan consists of the following four priorities.
And our people and our planet, providing unique experiences to our guests by leveraging data driven customer insights and digital capabilities delivering operational excellence at every level and allocating capital responsibly to yield the highest return for our shareholders.
Over the last several quarters, we've discussed the meaningful steps, we've taken to simplify our corporate structure and monetize the real estate assets to meaningfully bolstered our domestic cash position.
We reached another important milestone this journey Friday April 29, we closed the strategic transaction with MGM growth properties and Vichy.
Thanks, James Stewart, and Sheldon and the board and employees of M. G. P for all their support and for the great relationship. We have built over the years, our transaction with Vinci allowed us to fully be consolidate MVP from a financial reporting and it also matter. That's approximately 4.4 paid in cash, which we'll use to invest in our core business.
Well also continue to show meaningful growth opportunities.
One such opportunity is our announcement today of the tender for Leo Vegas, our success with bet MGM in United States gives us more conviction than ever about the potential for digital gaming and our ability to grow share in the exciting new marketplace and with this conviction, we're expanding internationally with the team at Lille Vegas It.
Strong technology platform and pipeline for growth present, a compelling opportunity for our business to grow online we'd like to thank the management team at Mayo babies Vegas for their professionalism and support throughout the process and we look forward to working with that team when the deal closes in the second half of this year.
Another opportunity that we're quite we're quite excited about its pursuit of a commercial gaming license in New York. The recently enacted at fiscal year 'twenty. Three budget includes provisions that will allow the issuance of up to three new licenses in the state we like to think of or a hotel in New York Legislature for getting this important issue across the finish line with ease.
To begin the RFA process and share our vision for the future of the property in Yonkers, where if we receive a license we plan to replace the existing <unk> with slot machines in that table games. So I, just think casino floor and construct new amenities and portions of our 97 acre site.
Again, we're excited by this opportunity and look forward to investing this disciplined new York to create new jobs and foster economic growth in the region.
Turning to our Las Vegas growth strategy, we made solid progress towards our acquisition of the operations of the cosmopolitan of Las Vegas and are on track to close this quarter.
All of it is an iconic brand with a loyal and complementary customer base. It will further enhance our Las Vegas strip portfolio, we've met with key leaders at the Cosmopolitan last weeks and months and are impressed by the quality of their team as well as the culture and the brands taking a pill.
We look forward to welcoming all the co stars at the Cosmopolitan to MGM resorts and adding this existing portfolio our property excuse me to our portfolio. We've also made progress on the sale of the operations at the Mirage The hard rock International, which we announced last year. We are working closely with our regulators to ensure a smooth transition and expect this.
This transaction to close in the second half of this year.
Shifting to our international growth strategy last week, we submitted our area development plan to the government of Japan with our partners at Orix and the city of Osaka. This just a final milestone before license decision will be made.
Hopefully in October of this year, we continue to work closely with the national government to obtain a license that would be hopefully awarded later this year and bring it fully integrated resort into Japan.
In the UAE, we continue to make progress and beginning the MGM brand family to Dubai.
Where we have a management agreement for an integrated resort being developed in partnership with Wassail. The project has broken ground and the development process and we remain diligent for opportunities to bring the Amgen brand to other locales around the world.
Turning to bet MGM, we are now live in 23 markets with New York, Illinois, Louisiana in Puerto Rico coming online in the first quarter and then Terry all launching in early April and.
In February that MTM commanded 24% market share in active markets in both U S sports betting and gaming, which puts us at the number one position nationwide.
That MGM is the clear leader in our gaming having reached 28% market share in February .
MGM management team will be able to provide more color on results in the strategy at the Investor meeting on Thursday May 12.
Finally, I'd like to spend a few minutes on our organic growth strategy on February one we relaunched our loyalty program is amgen rewards with the goal to.
Target high value non gaming customers. In addition to gaming customers increased cross property patronage and tier progression with well motivating benefits and further activate that MTM customers at our properties we.
We're seeing solid results since the launch of MGM rewards in Q1, particularly as it relates to our Omnichannel growth strategy with that MGM in the first quarter, 57% of our MGM rewards enrollments came via pet MTM driven by the Super Bowl compared to 39% for the full year in 'twenty one.
We've committed to our strategy of building loyalty between our different channels and ultimately, creating a seamless experience for our customers to play both online and in person.
Before I turn this over to Jonathan I'd like to hit a few highlights of our current trends and our future outlook.
In Las Vegas, we maintained strong margins in the first quarter, a reflection of the sustainable operating learning has implemented from the pandemic strong weekend Occupancies in ADR was driven by a robust event calendar and we see that trend continuing into the second quarter.
But the midweek occupancy is still behind 19, but an improving mix of business and a growing group base will allow us to ramp into the remainder of the year. We continue to expect our convention room nights to reach 90% of 2019 levels in the back half of 2022.
Importantly, we are seeing increased spend levels for our group's year to date, including catering and banquet and to spotlight our international leisure trends, we're beginning to see positive indicators of the return of international flight capacity in fact by this summer the a b C. D E F L X.
Expect international flight capacity to return to 80% of pre pandemic levels.
To further highlight events in Las Vegas, we were honored to host the Grammys at MGM Grand Garden, we welcomed the Bts Army to our properties for four sold out shows at Allegiant Stadium.
Past weekend, we also hosted the NFL draft, which activate the entire Las Vegas strip. We also have big sporting events coming with EMC to waive men's basketball regionals on tap for March of next year, along with a first of a kind formula one racing the Las Vegas strip in November of 'twenty, three and of course, we will host the Super Bowl in February of <unk>.
24.
All of these big events show the incredible progress the city has made as an entertainment and sports destination.
Turning to our regional properties, we had a very strong first quarter with competitive margins to 2021 and we're focused on driving strong rated gaming revenues by using our database with the highest value players.
Finally, I want to touch briefly on our operations in Macau, we continue to see headwinds in the short term with public health policies impacting the ability for customers to enter Macau. Despite this our 13% market share is higher than we've seen historically and our properties are well positioned to capture premium mass business as volumes begin to read.
Turn the.
The concession renewal process is underway and we remain confident.
Confident in the government's judicious and fair approach to this process Macau is an important part of our future and we will continue to work with the government to ultimately get our license renewed we look forward to further promote the long term development Macau gaming industry and supporting the government's tourism and diversification goals for the region with that I'll turn it over to Jonathan.
To discuss the details of the quarter.
Thanks, very much bill and good afternoon, everyone.
To Echo Bill's words by thanking the entire MGM resorts team for their professionalism and resiliency in the face of an ever changing operating environment.
I'd also like to thank the cosmopolitan of Las Vegas team for their support as we plan for clothing, and I look forward to welcoming the costars into the MGM resorts family this quarter.
Now, let's spend a few minutes on our first quarter results in some detail.
Our consolidated first quarter net revenues were $2 9 billion and our net loss attributable to MGM resorts was $18 million a significant improvement when compared to net revenues of $1 6 billion and a net loss of $332 million in the first quarter of 2021.
Our first quarter Las Vegas strip net revenues were $1 7 billion and adjusted property EBITDAR for the stress was $594 million.
Net revenues were down 1% on a same store basis due to 343000 fewer occupied rooms nearly all in January however, same store adjusted property EBITDAR of $472 million was up 21% versus the first quarter of 2019.
Demonstrating our broad based margin improvement.
First quarter occupancy was 78%, but it was a different story each month of the quarter.
The omicron impact was significant in January during which occupancy was 65%.
We recovered to an occupancy of 78% in February and finished the quarter with occupancy of 90% and March the strength continued into April where we saw an occupancy of 92% on the strength despite.
Despite the pandemic impact ADR in the first quarter was $197 or $184 on a same store basis, which was a dollar above the first quarter of 2019.
Same store excludes ARIA in EBITDAR in 2022.
Again, a different story each month for ADR ADR had a similar cadence as occupancy down 11% versus the first COVID-19 in January then up 4% in February and up 9% in March driven by strong weekend demand.
Simultaneously increases in volume and pricing improved our financial performance dramatically as we went through the quarter.
Las Vegas strip margins were 36% for the quarter and 35% on a same store basis, an improvement of over 600 basis points versus 2019 on a same store basis, we have the blueprint in place to sustain margins well above 2019 levels to our cost efficiency efforts in <unk>.
Operating leverage.
As Bill mentioned together with robust group demand, there's exciting programming in the second quarter that will drive increased leisure business in Las Vegas and support Occupancies in the low nineties.
Our first quarter regional net revenues were $891 million, an increase of 11% versus the first quarter of 2019, we delivered regional adjusted property EBITDAR of $313 million, which was 48% above 2019.
Our regional casino business was quite strong despite the typical seasonality in the business during the first quarter, our casino revenues improved 23% versus the first quarter of 2019, our first quarter regional margin of 35% grew 882 basis points versus 2019.
Promotional expenses in the regional markets are stable and a few points below 2019 levels.
Now we're down in the first quarter due in part to staffing challenges, but that situation is improving nicely this quarter.
Moving to Macau net revenues of $268 million in the first quarter represent a 9% decrease compared to the first quarter of 2021.
Adjusted property EBITDAR was a loss of $26 million in the first quarter versus a positive $5 million in the prior year quarter and the current quarter also included a charge of $18 million related to litigation reserves, we're confident in Macau that our product offering.
And our product offering and we believe that once demand returns, we're very well positioned to grow, particularly in our premium mass and mass segments.
Turning to bet MGM are 50% of that Mgm's losses in the first quarter amounted to $92 million, which is reported as part of the unconsolidated affiliates line of our adjusted EBITDA calculation. This was driven largely by the initial investment in New York, but we expect these losses to narrow in the us.
Coming quarters the growth story for bet MGM is a key pillar in our long term strategic plan connecting that MGM with MGM rewards allows us to develop a strong omnichannel linked with our customers that will optimize our guest experience both online and in person.
Our first quarter corporate expense, including share based compensation was $111 million, which included $9 million of transaction costs, we're strategically investing our corporate expense in growth areas, including improvements to our it infrastructure enhancing our digital offerings and our IR efforts in Japan.
Can.
And before we wrap up our prepared remarks, I would like once again to reiterate our approach to capital allocation.
<unk> will maintain a strong balance sheet with adequate liquidity.
Second, we'll invest where we have clear advantages exercising prudence and measuring prospective returns for our shareholders and finally, we'll return cash to shareholders and I think our actions thus far this year amply demonstrate our priorities and allocating capital.
We had the closure on Friday of our strategic transactions with BG and realized $4 4 billion in proceeds for MGM bolstering, our liquidity and strengthening our balance sheet.
This quarter, we announced or will close to strategic growth investments to augment our digital and Las Vegas market position.
Vegas, and the cosmopolitan of Las Vegas.
Finally during the first quarter, we repurchased $23 3 million shares for $1 billion in April we repurchased another $6 2 million shares. So since the beginning of 2021, we've repurchased $72 7 million shares for approximately $3 billion.
Or 19% of our market capitalization. This activity brings our share count down to about 425 million shares with that I'll turn it back to bill for his closing remarks.
Yeah.
Thanks, Jonathan we've made solid progress as a company coming out of the pandemic in our operating model is the strongest it's ever been I'd like to again, thank all of our team members for their commitment and dedication of MGM resorts, we would not be in the position. We are today without all of their hard work. Obviously, we were looking forward to the rest of 'twenty, two and beyond with confidence.
And feel our best days are yet to come with that operator, I'll turn it over and take questions.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if you're using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
As a reminder, in all fairness, please limit yourself to one question and one follow up.
The first question will come from Joe Greff with J P. Morgan. Please go ahead.
Good afternoon, everybody hope you're well.
Bill Jonathan I want to ask you.
You said, how you view.
Hum.
Your typical consumer and how they're maybe behavior, both in Las Vegas and regional.
Are you starting to see any any slowdown given obviously, what's what's out there in terms of higher gas prices higher interest rates.
And equity market that hasn't really done well this year and is that translating at all into any kind of pushback on hotel pricing food and beverage pricing, particularly on the strip any any pushback on on maybe out your kind of group bookings.
And then are you rethinking maybe you know how you're your pricing hotel in F&B product.
Thanks, Joe.
Look I think generally the answer is we have not seen any of that yet.
We've seen obviously a tremendous amount of strength in March and April has continued.
I think in many core is probably best suited to answer some of this maybe Jonathan can finish it up but Corey if you want it.
Yes, sure Joe we're not seeing anything any change in customer behavior pricing power still strong food and beverage revenues are breaking records. So we're not seeing it.
Great and then I know, it's relatively small or very small Lille Vegas.
Can you can you talk about how that fits with the joint venture.
And then can you just talk about that company's exposure, maybe to presently grain markets and would you expect that business to maybe see a trend change in revenue trajectory at some of those gray market markets tend to.
Transition into a legitimate more developed markets.
Sure Joe Let me, let me take that one first I think I want to start by just stressing.
Our partnership with <unk> as it relates particularly to bet MGM was accomplished has never been better I think we've finally really caught stride you can see that in some of our numbers and our market shares. We're excited for the next launch that the guys will go through and define some of the product, it's becoming our way I am.
You'll hear a whole lot more about that on Investor day on May 12.
As it makes to maintain specifically we tried a year ago as you know.
So by that and I don't think a whole lot has changed.
You've probably watched the basis of their shares in our shares kind of go hand in hand, and we said, Dan and I'm going to repeat now.
We need and want to diversify the revenue that this company, we absolutely thought this space with the right space and we did the bet MGM deal. It's now been double validated by that particularly the gaming segment, which Leo Vegas is extremely strong and and so we made our move to your point, it's not the world's largest acquisition its bite size.
It does give us exposure to nine global markets that we currently have we loved that team.
You know what they've been able to accomplish over the last 11 years they've had in the last five years, 16% compounded growth year over year.
And so the team has been great Gustaf from all these <unk> been able to accomplish the Texas rate the platform is just.
It's not on the cloud so all of the technology, we looked at and I can assure you we looked at that a lot.
It's first flash.
And we're going to get about 150 employees or several hundred of them were technologists, something our test our company can desperately use and need not only obviously for this effort potentially for other things long term in the company.
And so for US all good things as it relates to markets about 75% of their current markets are in regulated markets.
There are a few.
And only but a few that are single digit that we will close down.
Because of our bet MGM, New Jersey being one of them I think they I don't think I know they had 1% share in new Jersey market last month.
So I don't see any of it is considered any kind of a hurdle to get through and they have demonstrated and we know because we have growth potential within that organization. If there are other things to go out and capture I think this last quarter would demonstrate when others to casually have struggled they again had a great quarter I think they just.
Reported this morning, 14 million euros, EBITDA, which is about 35% a gain over the first quarter of last year. So couldn't be more excited by the transition even more so by the team and the ultimate technology and just the opportunity I think it provides us longer term, it's pretty exciting for us.
Great. Thank you.
The next question is from Carlo Santarelli from Deutsche Bank. Please go ahead.
Hey, guys. Thank you for taking my.
Jonathan maybe this one is best suited for you, but as you think about kind of the.
The current kind of outlook for Las Vegas, and you guys provided some color on the group stuff clearly Las Vegas has had seasonality over the years, but as you think about the balance of 2022, and obviously the challenging January with the variant spike and everything else that came with it.
With group business coming back is it is it kind of do you do you get the sense that maybe the market to just build quarter by quarter as we move through the year and secondly, I did just want to revert back to something you guys had a couple of quarters ago, how is that that when the group business returned it it would be a slight hindrance to margins, but greater EBITDAR.
As the cost structure sits today I'm, assuming you still feel pretty confident that that's what you'll see.
Yeah. Thanks, So let me take those two questions in turn firstly first of all.
As the as the year unfolds, we do see the group business continue to build in particular, the second quarter will be very strong for our group business and that's because our team was able to rebook. Many of the group customers that cancelled back in January into.
The second quarter.
So all that being said you know our business as we've grown it we've diversified our revenue streams.
Not as seasonal as you might think.
Through our event strategy and through our marketing strategy, we've been able to really I think drive.
Levels of business across the year that really keep our properties.
Running at an optimal level.
But the group business is of course was down in the early part of the year, but we see it continue to grow and it will exit the year at about 90% of 2019 levels.
As far as the margin dynamic you describe.
Yes, clearly as we bring back that important segment of the business, that's going to drive additional EBITDAR and depending upon the types of groups that we get it may have a slight diminishing effect on the margin of the.
The margins this quarter are really interesting stories, you know in Las Vegas, we reported about 36% EBITDA margins for the quarter.
But those started out in the low thirties and ended in the low forties as we drove that additional occupancy. So generally speaking occupancy is really good for margins in our business.
Understood. Thank you very much.
The next question is from David Katz from Jefferies. Please go ahead.
Afternoon, everyone. Thanks for taking my question I wanted to ask about Bliaut Vegas, a little bit.
Just having stood on it through the day I E. It looks as though it has an inherent CAGR growth rate the way. It is but are you able to.
Change the brand is the does MGM sort of wind up.
On the shingle in some way what what do you need to accelerate that from I think it's a 16% CAGR.
And some of the information out there on what's where is the ceiling for this what's the long term vision for it.
What.
David I think we see it as a vehicle to continue to grow globally, and it's a great starting spot because we again fundamentally liked the foundation of the company both in management and technology, particularly in gaming a Leo Vegas in Sweden, They have a dominant share there over 35% in the Nordics our fixture in the markets from the Nordics and in Sui.
And particularly they have a dominant share.
So that's of interest to us they will use our bravo. They we ultimately if we are able to get this through we'll use our brands MGM bellagio and others.
Obviously, it will be our company.
And one of the things that kept them restrained with capital and obviously given the balance sheet, given our desires and our our aspirations in this space they won't be capital restrained in the near term and it's something that we hope to have them lean into and we're happy to help with that.
We'll be cautious about it won't be as always wanting to understand growth and regulatory environments in all things that are out there.
But again, we've seen them demonstrate their ability to grow both.
Both organically and with acquisition and we have a couple of targets in mind with them to continue to grow that we think makes us a bigger piece of the pie for us and ultimately puts us on the map.
And I can add.
Sure.
So David if I could add one thing to that as well is that well work were.
We're very proud of the progress we've made on our share repurchases are just over a year.
<unk> repurchased 19% of the market cap of the company and that was an important part of the asset light strategy, but this allocation of capital to a company likely Leo Vegas, and perhaps follow on investment into that platform with other M&A opportunities is exactly that also the type of allocation of capital that we have.
Had in mind, when we set about with this draft of the strategy to put it towards digital gaming higher growth.
Vertical that in a platform, where we can extend our brand internationally.
So it really does complement our capital allocation strategy.
Understood and if I can just follow up quickly.
Regarding Vegas churn I think you touched on this.
From a few different perspectives, but as to the mix rolls into April and the mix changes and we get start getting more convention and midweek snapback, what happens to a D. R.
We sort of roll through the year or any.
Thoughts about that would be helpful.
Yes, David it's Corey what the convention business will do is it will help us in our midweek ADR, which we had a little bit less pricing power with that business that will allow us to yield up those rates or casino base continues to be strong and we don't see that business displacing that.
To the contrary will displace the lower in transit package business before we do any of the casino business.
So up is the answer more or less.
Yes.
Thank you very much.
The next question is from Shaun Kelley from Bank of America.
Yeah.
Thank you very much.
Jonathan I just wanted to start with margins either you gave an interesting trajectory there just how the quarter unfolded as it related to the growth and improvement in occupancy.
Any reason that we should be more cautious as we sort of move through the year relative to what you delivered in in the March timeframe.
I think one thing you you've highlighted in the past as you know a little bit around.
Mix shift, but you know as gaming remains pretty strong so far just maybe help us think about puts and takes almost vegas margins.
Yes, I mean.
Performance.
It's almost impossible to overstate just how strong our performance was in March. This company was firing on all cylinders and it was helped certainly by a very strong event calendar in the month.
So revenue level to a property.
And in margins.
Pages market in their regions were very strong because of that going forward theres no meaningful changes to the cost structure that will we're going to see as we go through the year the strength that we're seeing.
And group demand and what that means for rates, particularly in mid week will be healthy for margins.
You know that.
The casino business has been particularly strong as we've said on prior calls we do our business planning expect some of that spend to normalize.
Over the year and to the extent that happens exactly.
Our take on our margin levels.
Like I said in the call, we're certainly comfortable with margin levels being sustained in Las Vegas.
Our well above those that we delivered in 2019.
And we certainly did that in the first quarter and Sean Bill maybe just a little added color because I can't help myself. So in January in the midst of Ami crime, we are in the low Sixty's Leslie.
Las Vegas margin was still 31% by the time March rolls around and we reacted to the business that improved 1000 basis points in March.
Led by and this is another thing I'll brag on them because I'm proud of this team and the company, particularly Bellagio did and that normally we don't normally give these but I can't help myself lives year to date, <unk>, four and a half million dollars to EBITDA in March.
Don't think don't go times 12 now [laughter].
<unk> said that it just shows the strength and.
It was a property 22 years into a history had an all time months.
And a lot of it was helped by margin when you're doing 41% margin.
It just helps.
Thank you for the color and then just as a follow up sort of a similar question, but on capital allocation. This time, obviously I think the number given was $6 2 million shares repurchased in April you kept a very strong pace as we looked at through Q1 and of course, there was a I think are a little bit of a repurchase or a tender.
Offer their bye bye.
Shareholder. So can you just help us think about programmatic versus opportunistic as we think about the buyback pace going forward, obviously, a ton of cash in the door. So maybe just help investors think about.
The balance of the year and continuing to buyback. In addition to all the other things you're able to you're able to invest in.
Yes.
Just over a year, we've done just over $3 billion of share repurchases I think it's fair to say that this is a bit ahead of the pace that we might have predicted last year and it's because we've been opportunistic.
With opportunities the market presented in terms of the pricing of our of our shares which we believe are undervalued that being said, we now have largely come to the conclusion of the asset monetization strategy that we set out with the closure of the Vg.
N GT transaction last week.
And we have before us.
Interesting M&A opportunities and other growth projects Bill mentioned two of them in New York and of course, we are Vegas in our prepared remarks.
So.
We're going to keep powder dry to be able to to jump on those opportunities as they present themselves.
I think it's fair to say that our pace of share repurchases might be lower as we go through the balance of the year, but again a lot of it is driven by.
Opportunities the market provides us.
Thank you very much.
Okay.
Our next question is from Thomas Allen from Morgan Stanley . Please go ahead.
Thank you.
So one of your comments earlier piqued my interest that this layout Vegas acquisition was going to be potentially a platform for other deals can you just talk about that a little bit more I mean, I think Leo Vegas, the reputation of being really in the high gaming first platform I know that you can be for the for the sports betting part of that business.
Are you interested in potentially buying a sports betting platform what other what other opportunities do you see in the digital space. Thank you.
Hum.
Clearly to US I think there as the industry continues to expand whether you talk about Africa, South America, Brazil Other places.
We will continue to look at that through that vehicle.
There are other likeminded acquisitions of scale in Europe , it's still exists, particularly eastern Europe , and potentially exist and so look <unk>.
Recognizing it's a bite sized and mid sized opportunity for us.
The golden buying it wasn't to keep it there when we've talked about diversifying revenue and ultimately cash flow.
It's going to take some volume to do that and so this is our start into that genre and we like that team from an acquisition perspective, we've got the right mindset and.
And again, we like the way they think about the business, we like the way they market their business.
Their margins have been good had it not been for reinvestment in the business they would have been great.
And so we'll use that.
I don't know about tomorrow, but I I can expect very soon once we get through this transition and transaction will be back and looking how to grow that business, both organically and through acquisition.
Alright, and then on the bet MGM side, I think last quarter, you talked about having about $450 million losses. This year do you think that that's still a fair estimate and then.
Like what are your latest thoughts on the competitive environment on the revenue environment for the U S sports betting and I give them right.
First the first answer is yes second one is I don't want to take Adams Thunder.
Tune in May 12, Investor day.
Several hours of it but generally good from where we sit we love what we see we understand the noise around at all but we're seeing through it particularly with I gaming.
And so I think Adam and that team, Matt <unk> company will be dig into it and some great detailed ya.
Thank you very much.
Thanks.
The next question is from Robin Farley from UBS. Please go ahead.
Oh, great, Yes, I Wonder if you could talk a little bit about what kind of returns you may be targeting in New York.
Well look.
<unk>.
<unk> as we know today.
The opening bid and this isn't obviously an RFP process is 500 million for license. We know the tax is currently set at an opening minimum of 10 and 25, which is favorable.
It's kind of interesting we're talking about a half a billion dollars license fee as favorable as the <unk>.
Highest in the history of the industry by five X, having said that we like where the governor went with it we like the opportunity it creates.
We had hoped to invest up to a couple of day in the first round phase one to put us into the table games business to expand some of the amenity to put it much the parking garage there to put an entertainment facility there and potentially some other things we think that will attract the kind of market that's available to us both in the neighborhoods and the surrounding areas.
Like all of our stuff, we target mid teens and beyond and this wouldn't be any different.
I think that's a good way to think about it.
Okay, great Thanks and.
Can you talk a little bit about Leo Vegas, the tech capabilities and how that compares to what you have in the U S.
[laughter].
Look I want to I think I would say the key differentiator there it's cloud based and therefore, when you talk about expansion and scale ability and you talked about the ability to bifurcate the front end from the back end.
It presents that fairly easily.
And so we're.
Not running around having to deal with a bunch of hardware, we are not running around having to deal with code base that goes back a decade or so.
And so it enables us to be quick and scale quickly probably the principal two differentiators.
And then they've demonstrated an ability to in house game studios and others to have the casino business is meaningful.
Obviously, we'd like to think and we've seen this through pet M. Jim when we put our brand on things. It works. It works exceptionally well some of the best games on bet MGM or MGM branded games and.
And so we intend to do the same and grow that business in there and then I think the last thing and the thing that's noteworthy both here and there is live dealer.
It's a space in the place we want to continue to push into the <unk>.
They will give us one of the vehicles to do that.
And if you think about it and you all understand some of the valuations in the industry when it relates to live dealer providers.
At our core it's our stores that represent what they too.
If we can't do this in a fun and compelling and exciting way then shame on us and so we think theres, a great opportunity to do that as well and again.
Vegas is backbone and background enables us to do exactly that kind of offering.
Okay, great. Thanks very much.
The next question is from Dan Pulitzer with Wells Fargo. Please go ahead.
Hey, good afternoon, everyone and thanks for taking my questions.
So I just wanted to hit one more on Las Vegas can you talk maybe about the booking trends across the different properties in your portfolio in terms of luxury versus core is there any discernible differences in bookings just given given the volatility in the air fares and fuel prices.
Dan This is Corey we're not seeing anything different that we would've seen in the past I mean this luxury properties. Obviously arent don't have any challenges mid week. When you don't have convention business and the legacy properties have probably more a little bit more of a pricing challenge but.
That's very similar to what we saw.
Pre COVID-19.
Got it and then just actually on the regional I think in the deck you mentioned that staffing is expected to continue to ramp.
But the margins in this business it's been.
Pretty pretty remarkable in that mid 30 range I mean, as we think about you know you you continue to ramp bring back non gaming amenities, maybe the labor and cost inflation. That's out there how should we think about the cadence of the margin structure for the regional business over time.
This current rate a good enough level or should we moderate our expectations over time.
I think we're getting to the.
Minor strokes.
In terms of the opening of non gaming amenities ones that are important but are not financially.
Material enough to meaningfully move the margins one way or another.
No.
And what's what's happened also is.
In recent months, we've been able because of the labor availability has improved.
Yes.
Capacity open that we really need in order to meet the demand of that of course helps margins when we get more.
More customers at the hotel, so I think I think the impact going forward in the regional markets of the amenities on margins can be very small.
Got it thanks, so much.
Okay.
Okay.
The next question is from John Decree from C. B R. E Securities. Please go ahead.
Okay.
Hi, Bill Hi, Jonathan Thanks for taking my question.
I know the international business and group business is really just starting to ramp up now, but curious or maybe Corey if you have any insight as to the spending patterns of those customers as they come back to Las Vegas, we saw that.
Ruben you're spending of the U S domestic leisure traveler and trying to get a sense of how well some of the other customer segments are spending when they're actually getting back to Las Vegas.
Let me kick this off John quick.
And turn it over to Corey.
And actually one of the interesting thing and I mentioned in my comments, the 80% return International Air.
Despite the success, we've seen so far, particularly the last 90 days or less 75 days.
Canada has not fully returned yet and so that's good news and why.
But the good news is we've only seen about half of that come back and so we think there is a substantial uptick to come when that finally opens up we think Mexico is there Europe's been about half as well and then obviously we have not seen much in the far east whether its either leisure or at the higher end of the business, although the international marketplaces holding up from it.
Casino perspective, and so I think the Genesis of all of that between Canada, Europe , and ultimately whether it be six months, a year or God knows from now the balance of Asia returning.
It will all be accretive and additive to where we are today.
Thanks, Bill that's helpful. Maybe one on Japan, I know you gave an update.
Hopefully towards the end of the year.
Licensing process and if you're if you're successful can you give us a ballpark sense of what a timeline might look like from there in one of the most exciting projects you guys have on the horizon.
Curious as rough rough outline as to when you might be able to get a shovel in ground and <unk>.
And potentially getting moving if the licensing process kind of goes under the current timeline.
Thanks, John for the question and we agree.
To think we'd have a crack at this market at scale and be one of the lowest standing survivors I think will be pretty compelling for all of us that said I hope to be doing pylons by late 'twenty three early 'twenty four.
And then this just given its scale. This is a four and a half year a project to build so this is a 'twenty late 'twenty into 'twenty nine project is really the way to think about it I think.
Got it thanks, Thanks, Bill Thanks, Jonathan.
Take care.
The next question is from Chad Beynon with Macquarie. Please go ahead.
Hi, Good afternoon. Thanks for taking my question wanted to dissect. The Casino segment you noted in the slide deck that slot revenue on a two year or I guess on a three year stack basis was up 20% to 30% in the regionals in Vegas, where cables was flat to up 10.
I understand that Vegas is probably.
You know because of the higher end baccarat. It Hasnt return that you just touch on bill, but whats the disconnect in the regional markets and is this something that could be a structural change to the business just higher percentage of slots versus table revenue going forward. Thanks.
Hi, Chad, it's Corey in the regionals in particular.
Jonathan touched on this a little bit with the run limitations, especially at our properties like Borgata and bow that had an impact on tables, we are starting to see some of that play come back.
In Las Vegas, the table game play is pretty solid.
And youre doing that without any Asian play so just to even be up there and I think is a testament to the strength of that market.
I think to your core question fundamentally is there a change I mean.
I mean time to test there might be but we don't see one.
I think we're seeing some of the same activity case, whether it's the extreme amount of cash business. We see in Maryland, We just had a very successful tournament. This weekend in Borgata, which proved yet this was once again the marketplaces, therefore tables for blackjack.
And so fundamentally we don't see it we understand the numbers Youre dissecting, but you're looking at places like <unk>, where all in Detroit by the way for the day. If you look at Detroit, where Theres still have some restrictions yet that are hampering this business.
And when they begin to ultimately and finally come off.
We hope to see some lift as well.
Okay, Great and then.
Regarding the cosmopolitan in Las Vegas acquisition, how quickly after the close can the asset be implemented into your I guess your portfolio in Vegas and just your loyalty system. Thank you.
Ill take a depending on the system and the environment.
Some stuff is pretty quickly and some of it will take ultimately up to a year. When you say because we wanted to do with properly wanting integrated property, we want to make sure for both employees and guests, particularly their rewards guests that there are no takeaways.
And so it just depends on what segment and what piece of that environment Youre talking about but again, it's anywhere from 90 days to a year depending on how we are.
But the particular subject matter is we're in a very like I think we've said earlier too.
Making a mistake.
That place has done exceptionally well I think it's like if you look back trailing 12 was like 450 million of cash flow or something around that number and so we're gonna go cautious and relatively slow.
Perfect. Thank you very much I appreciate it.
Okay.
The next question comes from Barry Jonas from Truth Securities. Please go ahead.
Great. Thanks.
I appreciate youre, not seeing any impact to the consumer yet from inflation, but can you just talk about how long the booking window is in Vegas today, and then to what extent you have forward visibility across your markets given all the macro uncertainty out there.
Yes.
Barry the booking windows are similar to what it's been in the past. It's past 90 to 120 days, we have plenty of visibility there and we're pretty comfortable with that we're not seeing any slowdown in those areas.
Great that's great to hear and then just as a follow up question you note in the deck and I think in the remarks have bet MGM will integrate seamlessly into MGM rewards, but how are you thinking about cashless gaming maybe the ability to allow players to use their bet MGM wallet to fund purchases.
Play your physical casinos.
I don't want to change that understandably overall with that product offering come may 12, but a single wallet is literally in the making and you'll talk more about that on Investor day.
He'll talk about integrating it out with with your physical casinos.
Yes, yes.
Obviously, given the environment given the states, there's a lot of regulatory that goes along with that but structurally.
And from a technology perspective, our ability to do that is coming soon.
Great looking forward to it thank you so much.
Thank you Sir.
And the next question is from Ben Chaiken from Credit Suisse. Please go ahead.
Hey, How's it going.
In Vegas, you gave some very helpful intra quarter margin commentary.
Could you give some color on where we stand on a same store sales basis on some of the non gaming non hotel spend so I guess F&B entertainment et cetera, just ballpark versus 19.
Sure.
South Korea again, the food and beverage numbers are at 19 levels now even with less covers a little bit less coverage.
As occupancy picks up this company close to their entertainment spend pretty close to where it is and 19 also theres a lot more supply out there. So you know we're seeing our average ticket prices up in many of our venues with occupancy remained fairly consistent.
So all in all we're pretty comfortable with what we're seeing in the spending in the other areas and then eventually the catering and banquet business comes back in March was a great month for that we have some properties that had actually record catering and banquet business.
Once again that is a higher margin business than just normal restaurant business. So we're pretty optimistic about that also.
That's really helpful. Thank you.
And then in Downstate New York, If you do receive one of the licenses you mentioned.
What's table, some new amenities would it ever make sense to start on those new amenities now and then I guess.
While up or back the project based on the outcome I guess the thought process being.
To get a head start.
At one point there was discussion of netting out any spend at the property against the license fee and not sure where we stand there.
Or if that was just noise.
Yeah, I don't know that given the competitive nature of this the netting out peaceful sustain I suspect it won't.
Look we don't want to be presumptuous, obviously, we like where we stand I think we've served that community well and in turn they are prepared to support us.
Well, we're going to go like Hell and make sure that the data. This happens that slot machines are ready to go into that building.
And we're going to flip out roughly 1000 machines give or take to bring in tables as soon as we possibly can within months.
And we're going to make an assessment on a parking facility and when to go on that once the master planning, we haven't ultimately get our head around a master plan, which we're working on diligently now.
I wouldn't mind in there under any circumstance parking needs to be a real piece of this.
But it's a couple of million dollars. So we're going to be thoughtful about how quickly. We do go when it's all said and done.
It makes sense. Thank you.
Ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Bill Hornbuckle for any closing remarks.
Thank you.
So thank you all for joining us today again I just wanted to emphasize the resiliency of our team and the company and frankly, even the industry I mean, given how quickly we all came out of Covid and what we're able to do and particularly examples like the one I mentioned in <unk> in March kind of unprecedented.
So it couldnt be more excited by it and thankful for everyone's effort on that.
Our future has never been brighter we're sitting on an extensive amount of liquidity you saw us put it to work immediately with Leo Vegas in the space that we're highly interested and highly motivated by.
And our balance sheet is fortress I mean, we have never been in this position and so we're going to continue to look at proper ways to allocate capital, whether it's stock repurchase or most or more notably I think if this venture ways to grow our cash flow.
And we've continued to enjoy.
The growth of Las Vegas in that context and events capital of the World now in sports with all of the things that I mentioned earlier formula one of note coming forward.
Every weekend that we had a game or an event.
Down at the South end was it was a teens digit growth.
Norm for those properties and so that's all inherently built into our future now and so we're very excited by that as well and what's happening in Las Vegas. We're excited by New York of course, and then ultimately I think John put a point on it.
Long term, Japan is a very exciting thing for the company will have massively diversify our revenues more globally.
And so with that operator, I think you and I. Thank you all for joining us today.
And thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.
Okay.
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